Decentralized Exchanges: The Future for Trading Cryptos

Most likely your very first experience purchasing bitcoin involved using a centralized exchange.

If you can recall, I went into depth about a few of these exchanges in a recent video.
Despite their ease of use and high volumes, exchanges like Coinbase, Kraken, and Poloniex are indeed centralized. Considering that perhaps the most valued phrase regarding cryptocurrencies and their networks is “decentralization” it’s pretty ironic that the most popular exchanges don’t quite fit that philosophy.

Centralized exchanges are great for making quick trades.

They are also a great place for hackers to target.

In addition to providing a place to trade cryptos, centralized exchanges also provide a place for their users to store their cryptocurrencies. Even though it’s been said time and again that using exchanges to store any cryptocurrency that you are fond of is not a good idea, still lots of people do it. This results in the popular exchanges becoming a honey pot for hackers to target. This has resulted in many people losing lots of money.
Not because of the currency itself, but because the exchange had weak points that were taken advantage of.
Go ahead and google Mt. Gox and also more recently the Bitfinex hack.
Centralized exchanges are also subjected to governmental regulations and also the decisions made by those who run it. We are seeing this play out in China right now as the centralized exchanges there are now shutting down due to government regulations.

These are the exchanges that do not require a third party to store your funds, instead, you are always directly in control of your coins and you conduct transactions directly with whoever wants to buy or sell your coins.
Decentralized exchanges also do not require you to give out your personal information. You can create an account and right away be able to start trading.
However, one drawback for decentralized exchanges is the lack of liquidity compared to the more popular centralized exchanges. I think this will change over time as these centralized exchanges are forced into more strict regulations and as they pass these restraints on to their users, soon more people will seek out better options.

Another great benefit of decentralized exchanges is their distributed nature, meaning their servers are spread out so that there is no risk of server downtime.

Etherdelta has a relatively healthy daily volume that bounces around the $4 million mark. This exchange is based on the ethereum blockchain and is where you can find many of the ERC20 tokens that have not yet been added to more popular exchanges. It certainly lives up to the hype of not being user friendly. In fact I made a video that specifically goes over how to use this one for those who could use some guidance I suggest checking that one out.

Counterparty is a decentralized exchange that uses the Bitcoin blockchain and the Counterparty protocol acts as a decentralized escrow service. The volume on Counterparty leaves something to be desired I’m sure by it’s users with its daily volume hitting around $2,000.

All of the exchanges need to hire UX designers and help make the entire process easier for everybody, centralized or not.

There is a barrier to entry with trying to figure out what is what and how to work what. It seems the entire concept of User Experience was mostly ignored in favor of engineering on 90% of theses sites.

I'm available should any of you guys read this... IT IS A DIRE NEED!

I hope the decentralized exchanges continue to grow and surpass the centralized ones. Safer, more secure, and hopefully easier to work UX improvements into...

Head over to bitsharestalk.org and get hired by the Bitshares blockchain reserve fund. They are paying out over $180k USD for UI and other upgrades over the next six months. If you have UX talent they would be very happy to pay you very well to contribute, currently they are working on a bounty program at about $125/hr. If you get support from the community for your work/talent you can propose your own worker that can get voted in and pay you damn good money to work on the Bitshares DEX UI. People don't realize Bitshares makes money off each transaction, and instead of paying wasteful/corrupt/centralized mining cartels like BTC/ETH, puts the fees into a reserve fund, which is currently worth just under $100 million USD. No joke! Bitshares is the first decentralized autonomous company in the world and has been running for three years.

Okay, I'm sold.
I've been doing research on Bitshares over the past few weeks. Undecided on whether to risk some money on it or just let it pass as with dozens others. Your comment here is the decider. It's obvious you know much more than I do.

I have Counterparty but as Heidi had noted, the daily volume is VERY low. It might change in the near future though (the speculator's perennial hope). I'm going to hedge with the "DEX" theme by also buying Bitshares.

I will be sure to embed this video and link to your post in next weeks Bitshares State of the Network report; there is some great education in the video and sadly people generally only learn the hard way.

P.S - You should consider using your referral for your Bitshares/Openledger links; this way if people take your advise and sign up you will get a share of their transaction fees and visibility on your penetration.

Heidi is awesome.
Her post is cool.
Bag is cool.
Your comment is not cool.
Advertising like that, something that is not related to a post at all is (IMHO) not cool at all.
Fill the bag with at least one dollar bills(*) and send to Heidi, then I would even upvote your comment considering that as a bag that supports her work. :-)

(*) You might want to replace Washington with someone else if you want more upvotes.

I do have an OpenLedger account... I just hope they can pick up more volume, as trading outside a small group of active coins is so negligible as to render the exchange useless. But it's early days yet... in a few years, things may be different.

I can definitely see that it could... though I hope it stays low for a month or two more so I can get more invested. The volume of trading jumped high during the China ICO news. Now it has quieted down a bit. I'd love to see the volume of trading on BitShares and OpenLedger increase. So I'm glad that Heidi is making posts like these promoted Distributed Exchanges. She's doing a great service to all of us who like BitShares and are invested in it.

Good one there. I have personally used openledger and I think it is a great exchange. It may not be easy at first but if you look very well you will understand it. The interface is great and certainly easier than etherdelta

You forgot one. Steemit has it's own internal dex. Last 24h volume $10089.74. It only has Steem and SBD as a treading pairs. But there's word of allowing Steemit uses to create their own assets on the Steem blockchain.

I buy Litecoin with cash from someone I know. Then I deposit the Litecoin using OpenLedger. In OpenLedger (or BitShares app) go to the exchange for the BTS:LTC trading pair. See the picture and note the place where it says Deposit Open.LTC

Click on that and send your LTC to OpenLedger. Once it is there (and it does take a few minutes for it to show up), you can then make trades or buy orders with LTC to buy BitShares.

Note: You can also do the same thing with Steem and Steem Backed Dollars (SBD) and send them directly from Steemit to OpenLedger. It works great!

I fail to comprehend why decentralized exchanges are not as actively sought by the crypto community. Bitshares, blocknet and Counterparty should be more advertised. Especially Bitshares with its robust features and Assets exchange.

Thanks for the information. I haven't try any of this exchanges yet. I think we should all be using more of them, decentralized is the best way to go. I am kind of tired of sharing my personal information every time I need to open an account.

Good post. I fully support decentralized exchanges over centralized ones, for example look at China, most of the centralized exchanges have been told to shutdown and that caused a ripple downward effect in the price of bitcoin, and it is bitshares that is coming to our rescue there, and bitshares is decentralized, cause we obviously need the participation of China for bitcoin to continue to increase. DECENTRALIZED EXCHANGES ALL THE WAY. NICE POST. TANX

We should decentralize everything. Until we ask from manipulators permission to do something, we will never be free. We must ask ourselves why are we asking permission to do anything from terrorist sorry government?

Great article, thanks. I have been watching the trading volumes grow on some of the more popular decentralised exchanges. It is the way to go, especially since we don't know what certain governments are going legislate and how that could effect centralised exchanges.

Awesome, I have been listening to you on YouTube for a couple of months and now I found you on Steemit. Haven't spent too much time over here. Big Mistatke! Thanks for your info and all the research you do!

I just wrote a small article about this very topic myself. Smart bridges vs. Atomic swaps. If you don't know much about them, I'd invite you to research. A similar idea to these could literally unite cryptocurrencies under 1 decentralized umbrella. It would simultaneously solve the scalability problem. Good stuff!

Will you be in Lisbon so we would all be able to get together for a rehash, one year get-together waffle mission? And Great circumstances kicking it with you, Juan, and group a year ago at Steemfest in Amsterdam Heidi!

I agree fully on the topic at hand, i am currently using the waves platform which is pretty good. I myself recently have been given the opportunity to be apart of a wonderful ICO startup, with very strategic ideal resolution to reduce climate change. Heres the post, feel free to stop by if your interested and share the love as well. Thank for sharing and peace out! https://steemit.com/@beingadad

I personally use ShapeShift because it's based in Switzerland and as you may know where quit experience in handling money.

We will of course see a rise in demand as more and more solutions get developed to get rid of scaling issues. But for mass adoption, we need to compete for example with visa and this means doing multiple thousands of Transactions per second.

Thank you,
Learning more about crypto everyday, and your post has taught me more.
I will look into the exchanges that you have listed.
To keep crypto going I think we have to ensure it stays free of control.
Goverments and banks like control as it keeps them in power, the british goverment is cracking down on internet freedoms, using terrorism as a cover, wouldn't take too much for them to do the same thing with crypto.
Thanks again.

No. I believe that that very fact will be a huge turning point in the Crypto adoption race. Now, there are cryptos like USDT that are tied to the value of its fiat counterpart. Thus, there are foreseeable workarounds. But this in fact, will give crypto more staying power in the long as the fees tied to converting crypto to fiat and back will be much higher, and the process more tedi

I see. USDT is really the better way? Because sometimes we need to buy crypto coin asap. For now, only USDT can do that. Plus I don't like the idea of having tonnes of reserves of BTC. With all the hacking and all. Fiat is still the safe method in this current time. It will be great if these decentralized exchange could provide a bank account to bank in.

I think BitShares is what you are looking for. They have something called BitUSD that you can trade back to and hold value in dollars, if you'd like. You can also use the Bitshares you own as collateral and borrow BitUSD. In that way, BitShares is like a bank... but that you hold the keys to it.

Bitshares is indeed a decentralized exchange. And it IS very close to what you are looking for. However, the volume is much lower than traditional exchanges, and in times of great depression, there is some fear that converting OUT of BitUSD could theoretically become difficult if not impossible. However, we are not in one of those times. I would just sort of caution you not to keep all of your assets there. Diversify, always : ).

Diversification is good. It is easy to move Dash, LTC and BTC on and off BitShares using OpenLedger. That means that you have to keep crypto in those currencies, as you may loose a lot trading to to them in order to get them off.

However, you can also use services like ShapeShift.io to convert BitShares to many other crypto-currencies.

The liquidity and volume problem is one that will hopefully be solved by posts like this (thank you @heiditravels) that promote decentralized exchanges and get more people to use them.

Fees per trade are around a hundredth of a Bitshare (so way less than 1 cent). There are a limited number of coins, but still plenty of good trade opportunities.

I can't compare to centralized exchanges because I made the decision early on in my "crypto-journey" to primarily use decentralized blockchain technology. So I have never directly used a centralized service.

Well, thats just the thing... Its not that Bitcoin isnt safe... Its that exchanges aren't. You can store Bitcoin in a cold wallet, offline, and there is no way ANYONE can get to them. In fact, banks CAN be hacked. Bitcoin store in the right way cannot. Cryptocurrencies are far better than bank accounts. To go a step further... People all over the world who do not have access to bank accounts CAN indeed have a Bitcoin wallet. They can also send money back home to families if they need to migrate to make money. Another plus for Bitcoin.
This post never meant to imply that Bitcoin wasnt safe, only centralized exhanges are unsafe :).
I would definitely look up an article on how to safely store Bitcoin for more reading. In fact, I think I will write a post on here later today :).

Agree. Their support team is pretty active as well helping users. They announced a new new is coming in October. I'm excited about this. It should really appeal to users. Here is Sasha speaking a couple of days ago if you haven't seen it.

Komodo is the first Atomic swap decentralized exchange , also with Openledger there is 3rd party risk because you do not hold the Private keys to your bitcoin becaue it's OPEN.BTC. With Komodo you will hold all your keys, so Komodo is the first Truley 100% decentralized exchange with no counterparty risk.

Thank you for the information! I am completely new to cryptocurrency, and I actually just purchased my first fraction of a Bitcoin today (the conversion rates are really weird to me 😂) from Coinbase. I chose this one because it allows the purchase of Bitcoin with a debit card. I these decentralized exchanges, would this be possible? How else could I acquire Bitcoin and other cryptocurrencies without purchasing them with a debit card? I realize here on Steem may be a good way, but I would be interested in other ways. Thank you again!

I think the SEC had the chance to follow suit but since they've chosen to lay some ground work for regulation instead and work on a "case by case" basis it's much more likely that they don't want to stifle innovation... I also don't think China will permanently ban BTC.

Exodus is great way to exchange cryptocurrency right in your wallet , not sure if that's considered decentralized exchange or not. But, it sure is safer than leaving your crypto on centralized exchange wallets.